Don't panic during market roller-coaster

Financial experts say investors should be looking 'long term'

Financial experts say investors should be looking 'long term'

July 28, 2007|By Scott Waltman, American News Writer

Last week, the Dow Jones Industrial Average hit a record high, breaking 14,000 for the first time. This week, it's been sluggish and lost ground. But whether markets finish higher or lower on a given day isn't the type of news investors should put much, well, stock in. So said Mike Huck of the Investment Centers of America at Dacotah Bank in Aberdeen. Long-term investing is more important than the market's frequent ups and downs, Huck said. And given that philosophy, investors don't need to fret that the Dow struggled this week. The Dow - one of several stock market indexes used to measure the performance of American stocks - closed at 13,265.27 Friday afternoon. “Investors have enjoyed up markets for the last four years. However, when visiting with clients, I remind them the current level of the Dow is not all that important,” Huck said. “If they are retiring now, their retirement may last 30 years, and they need to be looking long term and not get caught up in the short-term idea.” This week's downturn means simply means that investors can get more for their money, Huck said. Invest in retirement: Dana Randall of Raymond James Financial Services said he's cautious about the market in the short term. But, he said, it looks good in the long term. In other words, he said, people should keep socking money away for retirement. “We think the market over the next three to five years will be very good, very strong,” Randall said. Chinese markets and energy have been driving the recent strong market, Randall said. China is behind the United States developmentally, but young people in the world's largest country know the goods and services Americans have and want them, he said. As for energy, Randall said, “We're a glutton for energy, and I think energy is going to be a player for many years.” Weak report: A weak housing market was a big factor in the market losing ground this week, Randall said. When Craig Golz of A.G. Edwards & Sons in Aberdeen looks at the market, he sees two offsetting forces. On one hand, consumer confidence has been increasing. But that's countered by what has been a weak national housing market. On a given day, news about either factor could force the market up or down. Randall said he's surprised the market has reacted so poorly to the housing news. Investors have long known the housing market would eventually peak, he said. A Friday report showed strong economic growth, but, Randall said, investors seemed to ignore it. Golz said reports can be taken as both good and bad. Friday's news that the gross domestic product was higher than expected might have led some people to think the market is too strong, and higher interest rates would result, he said. Investors shouldn't have been euphoric when the Dow hit 14,000 last week, and they shouldn't be panicked now that it's lower, Golz said. Like Huck, Golz said investors need to think long term. “No one can forecast short-term trends. It's sheer guesswork in the very short term,” Golz said. Huck said the 14,000 mark had people talking. But, he said, it didn't lead to a lot of new clients or unusual action. Follow the boomer: Looking ahead, Huck said, young investors should take note of what baby boomers - only a few years away from retirement - are doing. The sectors in which the boomers spend their money would make good investments for younger people, Huck said. Randall agrees. Baby boomer money drives the market, he said. Even as they approach retirement, they continue to invest. “What they're buying is where you want to be,” he said. Even when the market is strong, there is risk, Randall said. That's why many people might feel more comfortable investing in mutual funds in which investors decide how aggressive they want to be. In a mutual fund, an investor's money is used to buy a wide range of stocks that financial experts believe will grow. Investors have to be comfortable even during a downturn, Huck said. Those downturns are especially good times not to watch the Dow daily. But if investors can't help themselves, Huck said there's reason to take heart: History shows the markets always bounce back. As for this week's lower markets, this was Randall's take on stocks as they closed Friday: “They're on sale today.” “Next week will be another story,” Golz said, referring to last week's ups and this week's downs.